The EU Regulation on the Carbon Border Adjustment Mechanism (CBAM) was adopted in May 2023. From January 1, 2026 all imports of aluminum, steel, iron, fertilizers, electrical energy, hydrogen, or cement into the EU will be subject to CBAM, with penalties (fines) for non-compliance. The transitional phase already started on October 1, 2023 and ends on January 1, 2026. During this transitional period, emissions reporting is required without ‘financial adjustment.’ During transitional phase, the EU importer or indirect customs representative must submit a CBAM report on a quarterly basis (at the end of the month following each quarter) starting with January 31, 2024 for the first report covering Q4 2023.

The EU4Energy project has performed important work on the CBAM impact analysis in BiH, covering five sectors of the economy applicable for CBAM. One of the conclusions of this analysis shows that electricity is the most affected industry in BiH.

BiH can avoid CBAM for electricity exports (not for other products) until 2030 if it fulfills certain preconditions. An important aspect in avoiding the CBAM costs is the introduction of the Emissions Trading System (ETS) in BiH, since carbon costs paid in the country are deducted from CBAM.

The preliminary analysis shows that some 44% of exports from BiH, including steel, cement, and aluminum, will be impacted by CBAM and some 5% of GDP will be endangered. More information on the impact analysis will be provided in the panel. The panel will discuss the current situation on how the companies in BiH are preparing for CBAM, what the challenges are, and whether the necessary actions are being taken by policy makers to avoid CBAM for the power sector. The panel will also draw upon the experience and lessons learned in the EU so far on dealing with CBAM regulation.